Royal & Sun Alliance relief after cash call fails to show

Shareholders in Royal & Sun Alliance breathed a sigh of relief today as the insurer's results arrived in a better-than-expected condition and a widely mooted cash call did not materialise.

The shares have been hit lately on growing speculation that RSA was plotting a rights issue that would bolster its balance sheet at the expense of investors.

Today RSA admitted that a weaker performance from its investment arm had held back returns, but made no mention of the need for fundraising.

Profit slipped 10% to £777 million, some way better than City analysts were predicting. The total dividend of 5.33p is up 7%.

The combined operating ratio— anything less than 100% indicates policies are being written at a profit— is 94.6%.

RSA, best known for its More Than motor and home insurance brand, also offered an upbeat outlook, saying it was "confident of our ability to continue to deliver excellent results".

The shares were steady at 131.8p in a flat market.

Oriel Securities wrote in a note: "These results again demonstrate RSA's track record for delivering on its targets."

Like all insurers RSA has faced speculation that it is plotting a big deal, perhaps to break up Aviva's British arm. Analysts noted that it was borne of messy mergers and may not have the stomach for another.